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Zamboanga, Philippines: Muslim militants traded gunfire with Philippine troops Tuesday and were using almost 200 villagers as human shields, officials said, in a stand-off after a deadly attack on a southern city.

Gunshots rang out on the coastal outskirts of Zamboanga city on the second day of a confrontation between the government and Moro National Liberation Front (MNLF) fighters intent on derailing peace talks.

“The security forces... have stabilised the situation. It has been contained and isolated and won’t spread to other areas,” Interior Secretary Mar Roxas told reporters, adding that authorities were trying to negotiate with the gunmen.

About 180 residents are being used as “human shields” in six villages where the rebels are holed up and surrounded by security forces, Roxas told a joint news conference with Zamboanga mayor Maria Isabelle Climaco Salazar.

The government had described the villagers as “hostages” but Roxas said it appeared they could be free to leave if they wished.

“It appears that what happened is not hostage-taking but more of them being turned into human shields by the MNLF forces who entered their communities. People are free to get in and out of there, they are not bound, they are not detained,” he said.

“Whether they are hostages or not is still being validated.”

The gunmen, followers of MNLF founder Noor Misuari, landed by boat and poured into the fishing villages on Monday before mounting an assault on Zamboanga, causing panic in the city of nearly one million people.

Misuari, who could not be reached by AFP nor by government negotiators, had earlier declared “independence” for the Muslim southern regions of the mainly Catholic Philippines and called on his followers to besiege government installations.

President Benigno Aquino, speaking to reporters in Manila, refused to set a deadline for resolving the crisis.

“We can’t be giving deadlines when what we want to ensure is that no more civilians are affected, hurt or killed,” he said.

The initial attack killed four people and left 14 injured, Roxas and Salazar said, reducing the toll given Monday when the mayor said there were six dead and 24 wounded, and giving no explanation for the revision.

Military spokesman Lieutenant-Colonel Ramon Zagala estimated they were 180 MNLF gunmen hiding out in the communities and armed with rifles and mortars, revising down an earlier estimate of 200-300.

About 1,500 elite troops backed by a smaller number of police have surrounded the area to hold the gunmen in place and prevent the arrival of potential rebel reinforcements, he said.

Defence Secretary Voltaire Gazmin, speaking alongside Roxas and Salazar, said government forces “were able to intercept” other MNLF forces who had been on their way to Zamboanga, but gave no details.

MNLF spokesman Emmanuel Fontanilla told DZMM radio that the rebels were prepared to dig in.

“Our forces will stay where they are. They are on a defensive posture,” he said.

The fighting has displaced about 1,500 residents of the mainly Muslim villages.

ABS-CBN television footage showed hundreds of residents, including old women and children, spending the night sleeping on the floor of crowded gyms after fleeing the conflict.

Misuari has criticised a preliminary peace deal signed last year by the government and the Moro Islamic Liberation Front, which split from the MNLF in 1978.

He said the agreement marginalised his group and a peace treaty that it signed in 1996.

The gunmen launched their attack as the government prepared to resume peace talks with the MILF, aimed at ending a 42-year-old rebellion that has claimed 150,000 lives.

It was the second such attack on Zamboanga since 2001, when Misuari’s men also took dozens of hostages and left many more dead, but were given safe passage out of the city by freeing their captives.

Misuari fled to Malaysia, where he was arrested and deported, and was kept in police prisons in Manila until the government dropped all charges against him in 2008.

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